Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

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NEW YORK (

TheStreet

)

-- Enersis

(NYSE:

ENI

) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
  • ENERSIS SA's earnings per share declined by 15.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENERSIS SA increased its bottom line by earning $1.20 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $1.20).
  • The gross profit margin for ENERSIS SA is currently lower than what is desirable, coming in at 29.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.77% trails that of the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electric Utilities industry and the overall market, ENERSIS SA's return on equity is below that of both the industry average and the S&P 500.

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Enersis S.A., an electric utility company, through its subsidiaries and jointly-controlled entities, engages in the electricity generation, transmission, and distribution businesses in Chile, Brazil, Colombia, Peru, and Argentina. The company has a P/E ratio of 14.3, below the S&P 500 P/E ratio of 17.7. Enersis has a market cap of $11.18 billion and is part of the utilities sector and utilities industry. Shares are down 6% year to date as of the close of trading on Tuesday.

You can view the full

Enersis Ratings Report

or get investment ideas from our

investment research center

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-- Written by a member of TheStreet Ratings Staff

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